Card Range To Study

83 Cards in this Set

The process of identifying, recording, and communicating the economic events of a business to interested users of the information.

Annual Report

A report prepared by corporate management that presents financial information including financial statements, notes, and the management discussion and analysis.

Assets

Recourses owned by a business.

Auditor's Report

A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with accepted accounting standards.

Balance Sheet

A financial statement that reports the assets, liabilities, and stockholder's equity at a specific date.

Basic Accounting Equation

Assets = Liabilities + Stockholder's Equity.

Certified Public Accountant (CPA)

An individual who has met certain criteria and is thus allowed to perform audits of corporations.

Common Stock

Stock representing the primary ownership interest in a corporation. In the balance sheet it represents the amount paid in by stockholders.

Comparative Statements

A presentation of the financial statements of a company for multiple years.

Corporation

A business organized as a seperate legal entity having ownership divided into transferable shares of stock.

Cost Principle

Assets should be recorded at their cost.

Dividends

Distributions of cash or other assets from a corporation to its stockholders.

Economic Entity Assumption

Economic events can be identified with a particular unit of accountability.

Expenses

The cost of assets consumed or services used in ongoing operations to generate revenues.

Full Disclosure Principle

Circumstances and events that make a difference to financial statement users should be disclosed.

the assumption that the enterprise will continue in operation long enough to carry out its existing objectives and commitments.

Income statement

A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.

Liabilities

The debts and obligations of a business. Liabilities represent claims of creditors on the assets of a business.

Management discussion and analysis

A section of the annual report that presents management's views on the company's short-term debt paying ability, expansion, financing, and results.

Monetary unit assumption

An assumption stating that only transaction data that can be expressed in terms of money be included in the accounting records of the economic entity.

Net income

The amount by which revenues exceed expenses.

Net loss

The amount by which expenses exceed revenues.

Notes to the financial statements

Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is needed.

Partnership

A business owned by more than one person.

Retained earnings

The amount of net income kept in the corporation for future use, not distributed to stockholders as dividends.

Retained earnings statement

A financial statement that summarizes the changes in retained earnings for a specific period of time.

Revenues

The assets that result from the sale of a product or service.

Sole proprietorship

A business owned by one person.

Statement of cash flows

A financial statement that provides information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time.

Stockholder's equity

The stockholder's claim on total assets.

Time period assumption

An accounting assumption that the economic life of a business can be divided into artificial periods of time.

To present a picture at a point in time of what your business owns and what it owes. . . .

Balance sheet

To show how successfuly your business performed during a period of time you would report its revenues and expenses in the. . . .

Income statement

To indicate how much of previous income was distributed to you and the other owners of your business in the form of dividends, and how much was retained in the business to allow for future growth, you would present a. . . .

Retained earnings statment

Of particular interest to your bankers and other creditors, you would present a. . . .

Statement of cash flows

Objectives of Financial Reporting are. . . .

1. Useful information
2. Constraints

GAAP

generally accepted accounting principles = a set of rules and practices, that are recognized as a general guide for financial reporting purposes.

assetsv that are expeted to be converted to cash or used up by the business within one year. (cash, short-term investments, accounts receivable, inventories, supplies, prepaid insurance)

long-term investments

investment in stock of a company, investment in real estate

property, plant, and equipment

assets with relatively long useful lives that are currently being used in operating the business. (land, office equipment, less: accumulated depreciation)

intangible assets

assets that do not have physical substance yet often are very valuable. (patents, copyrights, and trademarks, or trade names that give the company exclusive right of used for a specified period of time.)